Alibaba and Apple Team Up to Bring AI to iPhones in China

Alibaba Group Holding Ltd's co-founder and chairman Joe Tsai revealed on Thursday that Alibaba will partner with US tech giant Apple Inc to roll out artificial intelligence features for iPhone users in China. Tsai made the announcement at the World Governments Summit in Dubai, the United Arab Emirates.

He stated that Apple required a local partner to provide AI services for its phones in China and had engaged with several Chinese companies before ultimately choosing to do business with Alibaba. Media reports indicated that Apple had considered models developed by Chinese AI startup DeepSeek but decided against the partnership. The decision was based on DeepSeek's limited manpower and experience to support a large-scale customer base.

The partnership is a critical move for Apple, which has faced declining iPhone sales in China amid growing competition from domestic rivals, particularly Huawei. Industry analysts have pointed to the absence of advanced AI features – a key selling point in latest-generation smartphones – as a significant disadvantage for Apple in the Chinese market.

Alibaba became a Chinese AI favorite among investors early in 2025, with its stock price up over 40 percent so far this year. In late January, the firm released a new version of its Qwen 2.5 AI model, whose functionality it said surpassed that of DeepSeek-V3, which caused a stir earlier this year for its capability and low cost.

The partnership between Alibaba and Apple is expected to provide Apple with a competitive advantage in the Chinese smartphone market by offering advanced AI features, helping it regain market share, and ensuring regulatory compliance. Additionally, the partnership may drive further innovation and competition in the Chinese AI sector.

However, the partnership may face regulatory challenges in China due to the country's stringent rules on AI technology. Alibaba can help Apple navigate these obstacles by providing local expertise, assisting with regulatory approval, ensuring compliance with data regulations, and localizing AI features.

In conclusion, the Alibaba-Apple partnership aligns with Apple's broader AI strategy by helping the company expand its AI capabilities in China, compete with domestic rivals, advance its global AI strategy, and comply with local regulations. The partnership is expected to provide Apple with a competitive advantage in the Chinese smartphone market and drive further innovation in the AI sector.